1.1 Inclusion of Health Services and Environmental Protection under charitable status
Change:
Section 64 of the Income Tax Act has been amended to include institutions which deal with advancement of health services and environmental protection under charitable institutions so as to relieve them of Income tax obligations. The objective is to encourage charitable services particularly in the health and environment maintenance sectors to support the global fight against climate change.
Implication:
Health services are currently included in the list of NGOs in Tanzania qualifying to obtain charitable status under section 64. However the inclusion of environmental maintenance is commendable. Donations to these sectors are also deductible.
1.2 A requirement to have Electronic Fiscal Receipts (EFDs) receipts to support Expenditure Deduction
Change:
Section 11 of the Income Tax Act, Cap 332 has been amended by adding a requirement to use electronic fiscal receipts to authenticate purchases made in a particular year of income. The measure will exclude sellers of goods or suppliers of services who are foreign citizens with no permanent establishment in Tanzania or any person who is not required to issue electronic receipts as per section 36(2) of TAA.
The government objective is to emphasize the issuing of electronic receipts and protect government revenue.
Implication:
NGOs in Tanzania will need to ensure purchases are supported by EFDs and a robust record keeping system is in place. However, disputes could arise with the tax authority when only electronic fiscal receipts are recognised. These could arise from expenses recognised through accrual accounting, those whose suppliers cannot issue receipts, quality of receipts etc. Taxpayers can apply for private or class rulings for TRA to provide clarity on the challenges. TRA can also consider issuance of a practice note to provide more guidance to taxpayers.
1.3 Illegal to transact in other currencies
Change:
Section 26 of the Bank of Tanzania Act has been amended to make transactions using any other currencies other than the legal tender issued by the Bank, illegal except as prescribed by the Minister in the regulations.
Implication:
This implies that all transactions within Tanzania must be done in Tanzania shillings. The regulations will provide more guidance.